National Australia Bank Ltd (ASX: NAB) shares have tumbled 1.3% in Tuesday’s trade. At the time of writing, the shares are changing hands at $44.18 a piece.
The slump means the banking giant’s share price has dropped nearly 9% over the past month as global volatility, higher interest rates, and a slowdown in lending take their toll on the banking sector.
However, year to date, NAB shares are still trading 4% higher, and they’re a huge 30% above where they were this time last year.
For context, the S&P/ASX 200 Index (ASX: XJO) is 3.8% lower year to date and 5.8% higher over the year.
NAB shares might have come off the boil this morning, along with many other ASX 200 shares, but there are still three compelling reasons why the bank stock is still a buy.
1. NAB is a classic defensive stock
The banking giant is a fantastic defensive stock that can remain stable in times of economic crisis. Unlike discretionary spending, which can be curbed, there will always be a need for banking services regardless of where we are in the economic cycle.
2. The company is stable
Because NAB is a defensive stock, the bank is able to benefit from a stable and recurring income. Its latest financial results show how its operational performance and earnings are able to stay strong and consistent, even when markets are weaker. The banking giant revealed a 15% hike in its cash earnings for the first quarter of FY26 and a 6% increase in revenue.
While it is still sensitive to economic conditions such as further interest rate increases, increased sharemarket volatility, or a potential recession, its income and scale make it a good, stable option over the long term.
3. NAB pays reliable dividends to investors
NAB shares typically trade at a lower price-earnings (P/E) ratio than other sectors, which means investors are able to earn a higher dividend yield.
The bank paid an annual dividend of $1.70 per share in FY25, which was 1 cent per share higher than FY24. The annual dividend is forecast to also be $1.70 per share in FY26, fully franked, and then to climb to $1.705 per share in FY27 and $1.72 per share in FY28. It’s not a huge increase, but it’s a steady one.
The post 3 reasons to buy NAB shares today appeared first on The Motley Fool Australia.
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Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.